China growth slows to lowest level since financial crisis

China growth slows to lowest level since financial crisis

By
Nick Beams

22 October 2018

The growth rate of the Chinese economy has fallen to its lowest level since the beginning of 2009 in the immediate aftermath of the global financial crisis.

Official figures released at the end of last week put the annual growth rate for the third quarter at 6.5 per cent. This was below market expectations of 6.6 percent and down from the rate of 6.8 percent for the first half of the year.

While the trade war launched by the US has yet to make a significant impact on growth, the official government statement accompanying the release of the data referred to what is called the “severe international situation.”

One of the main contributors to the growth decline was the reduction in industrial output growth which weakened to 5.8 percent in September from 6.1 percent in August. Retail sales growth for the first three quarters was 9.3 percent compared to 10.4 percent in the same period last year. Car sales are significantly down, falling for a third straight month in September, with the Chinese market on track for its first annual decline in nearly three decades.

Exports were up, but this has been attributed, at least in part, to exporters front-loading their shipments in an effort to escape the effects of further US tariff increases. In addition to the 25 percent tariffs on $50 billion of industrial goods, the Trump administration has imposed a 10 percent duty on an additional $200 billion worth of goods, covering a range of consumer products, which is set to rise to 25 percent at the start of next year. Trump has also threatened tariffs on a further $250 billion worth of products, which would mean that all China’s exports to the US would be covered.